August 10, 2009
DODD: VICTORY ON CREDIT CARD FEES, BUT OVERDRAFT FEES DEMONSTRATE NEED FOR CONSUMER FINANCIAL PROTECTION AGENCY
WASHINGTON – Senate Banking Committee Chairman Chris Dodd (D-CT) issued the following statement on a day two credit card companies announced they will stop charging customers fees for exceeding their limits but new research shows major banks are charging customers record dollars in overdraft fees.
Today American Banker reported that “American Express Co. and Discover Financial Services are eliminating over limit fees on consumer credit cards…In so doing, they may lead the way for other issuers to give up on over limit fees.” The article credits a Credit CARD Act requirement that consumers “opt-in ‘for over-the-limit transactions if fees are imposed’” as making these fees less desirable to banks.
Good news for credit card customers, but today’s Financial Times reported “US banks stand to collect a record $38.5bn in fees for customer overdrafts this year... The most cash-strapped customers are the hardest hit by such fees, with 90 per cent of overdraft revenues coming from 10 per cent of the 130m checking accounts in the US.”
“I’m proud the Credit CARD Act is working to deter credit card companies from charging customers unfair fees. But there is a lot of work to be done,” said Dodd. “Banks should make their profits off of their investments, not by abusing customers struggling with the economic recession. Congress and the Federal Reserve can act on these problems as we discover them, but we need to create a Consumer Financial Protection Agency that makes looking out for problems like these their full time job.”
Dodd wrote a letter on June 9th asking the Federal Reserve to finalize a rule to curb abusive overdraft practices and to require that customers opt-in to bank overdraft services with fees just as credit card companies are now required to do for over-the-limit transactions with fees.
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